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Is the Arbitration Provision in Your Employment Contract Enforceable?

As an employer, you may contemplate requiring any employment related disputes to be arbitrated in order to avoid the risk of facing a jury trial of an employee’s claim.

However the courts have long held that one-sided arbitration provisions are not enforceable.  There are five minimum requirements for mandatory employment arbitration provisions:   (1) neutral arbitrators, (2) more than minimal discovery (the opportunity to view relevant documents, depose witnesses, etc.), (3) requirement of a written award, (4) provision for all types of relief that could be available in court, and (5) provision that the employee does not have to pay any unreasonable costs or any arbitrator’s fees.

Likewise, provisions in such employment agreements which grant the arbitrator the power to decide if the contract is enforceable have been held to be unenforceable.

Arbitration agreements can be very useful to an employer.  However, they must be carefully and fairly drafted to be enforceable.